Merger talks between the two construction giants leading Aberdeen’s £745million bypass project have stalled after Balfour Beatty announced it was “terminating” discussions with Carillion yesterday.
Carillion is now weighing up its next move after plans to create a new FTSE 100 construction giant stalled, although it insisted that it continued to believe in the “powerful strategic rationale” of a combination.
Balfour blamed its withdrawal on Carillion’s “wholly unexpected decision” to insist that Balfour’s US business Parsons Brinckerhoff be included in the deal.
The two sides had previously agreed to start merger discussions on the basis that Balfour continues with previously announced plans for the sale of Parsons, a business it bought for £380million in 2009.
Shares in Balfour and Carillion closed more than 5% lower yesterday, having surged in recent days on hopes that the two companies will agree a £3.4billion tie-up.
The discussions, which were disclosed last week, followed an approach from Carillion at a time when Balfour is struggling after a series of profits warnings and the departure of chief executive Andrew McNaughton.
Carillion said it was surprised by Balfour’s decision to walk away as their talks had “led to increased confidence in the potential to realise very material value for the benefit of both sets of shareholders”.
Last month the Connect Roads consortium, which also includes Galliford Try (Morrison Construction), were awarded the contract to build the bypass.